Episode summary
How $70 Billion Actually Gets Deployed in Private Markets
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Jennifer Mink
Summary
Jennifer Mink says IPS, with roughly $70 billion in assets under advisement, tries to improve portfolio outcomes by combining public and private assets in ways that lower total volatility rather than simply chasing the highest-return sleeve. Her core argument is that lower correlation matters: adding alternatives like infrastructure and private equity can reduce risk at the portfolio level even when the underlying asset is more volatile on its own.
She also argues that investors make two common mistakes: over-diversifying both at the fund level and the portfolio level, and investing without a clear thesis. In her view, education and discipline matter most when markets are stressed, which is why IPS pushed clients to rebalance into equities during the 2020 selloff and again after the snapback.
A big part of the conversation is about how IPS screens managers and accesses Taft-Hartley capital. Jennifer says the firm typically tracks emerging managers through one, two, or three vintages and waits until about fund four before deploying capital. She also says managers must be willing to meet ERISA fiduciary requirements and, for real assets, accept responsible contractor policy terms.
Key takeaways
- Jennifer Mink says IPS can reduce total portfolio volatility by adding alternatives with low correlation to public markets.
- She argues that ‘double diversification’ can weaken returns if investors spread risk too thin at both fund and portfolio levels.
- IPS usually follows emerging managers through one, two, or three vintages and starts deploying around fund four.
- Jennifer Mink says ERISA fiduciary language and responsible contractor policies are key gates for Taft-Hartley capital, especially in real assets.
- She says the private equity distribution slowdown is making pacing harder and has pushed IPS toward infrastructure and private credit.
- Jennifer Mink says sometimes the best investment decision is the one you avoid, especially when a strategy lacks fit for the mandate.
Notable quotes
“When we add that to the investment portfolio it actually decreases the overall risk and volatility of the total portfolio”
“sometimes having more things in the portfolio is less risky than only having a few what we would call safer less volatile investments”
“Understanding the fundamental thesis behind it helps you not only not sell early when it's down”
“we were very proactive in 2020 in the second quarter to rebalance specifically to equities”
“sometimes the best investment you make is is the one you avoid”
How the episode opens
So, you're president of investment performance services, which has roughly $70 billion in assets under advisement. When we last chatted, you mentioned that you guys are able to increase your returns while decreasing volatility. That caught me by surprise. How are you able to accomplish that?
So, one of the things that we do for our clients is asset allocation modeling. So we are building portfolios for them to help them not only reach their investment goals but to have ample liquidity to pay their ongoing benefits. Uh so when we do that asset allocation modeling a lot of times what we're able to do is take an asset class that maybe has a higher standard deviation.
When we add that to the investment portfolio it actually decreases the overall risk and volatility of the total portfolio. So we look at that as a true benefit to diversification. Give me an example of that.
A good example would be alternative investments. So many clients have a lot of experience with public markets. But as we start looking at some more exotic asset classes, private asset classes like infrastructure, private equity, when we look at the standard deviation of some of those investments relative to say an investment grade bond portfolio, when we add that to the portfolio, it actually decreases the overall, you know, volatility of the portfolio simply by having that lower correlation.
That's a very important factor. So we try to educate our clients about that about asset class correlation and sometimes having more things in the portfolio is less risky than only having a few what we would call safer less volatile investments.
There's two different mistakes that investors oftentimes make. One is I would just call it double diversification. So they diversify on both the fund level and on their portfolio level where sometimes the best portfolios actually have spiky assets.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private markets deployment
- taft-hartley pensions
- alternatives volatility
- manager diligence
- private equity fundraising pacing
Companies and tickers mentioned
- AlphaSense
Watch the episode
Watch “How $70 Billion Actually Gets Deployed in Private Markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
